Robinhood (HOOD) banal has been connected a downtrend since its IPO successful July of past year. The fiscal services company, which aims to “democratize concern for all,” besides precocious produced a lackluster net report for Q1 2022.
Amid Robinhood’s fiscal woes, concern YouTube transmission big and retail trader Matt Kohrs believes the outlook is bleak for the company’s stock.
“At slightest from the retail trading community, which I'm happily a subordinate of, I don't truly deliberation the sentiment has changed, I mean, it's a dumpster occurrence of a situation,” Kohrs told Yahoo Finance Live. "I mean, successful 2021, they managed to propulsion $3.7 cardinal into a pit, douse it successful gasoline, and airy it connected fire. And it seems similar they're not truly changing course, arsenic we're kicking disconnected 2022.”
Kohrs joined Yahoo Finance Live to sermon quarterly net for Robinhood and wherefore retail traders are leaving the platform. The institution posted a larger-than-expected nonaccomplishment for the 4th ended March 31, arsenic full nett revenues decreased 43% twelvemonth implicit twelvemonth to $299 million. The archetypal 4th of 2022 marked the 5th consecutive quarterly driblet successful gross for Robinhood, with the full nett nonaccomplishment coming successful astatine $392 million, oregon $0.45 per diluted share.
Monthly progressive users besides fell 10% twelvemonth implicit twelvemonth — a large deed to Robinhood’s payment for bid travel (PFOF) concern model, of which the online brokerage has received disapproval successful the past for. Berkshire Hathaway (BRK-A, BRK-B) Vice Chairman Charlie Munger, an outspoken professional of the PFOF model, likened Robinhood’s fiscal reckoning to “God enacting justice.”
“I deliberation there's decidedly a leap now,” Kohrs said. “People are ditching Robinhood for different commission-free brokerages. But I deliberation there's 2 large ways to look astatine this. If we look astatine classical cardinal investigation of what's happening, their monthly progressive users successful the 4th implicit 4th dropping by astir 1.4 million, and connected apical of that, it's worse due to the fact that they're besides getting little wealth per idiosyncratic — the revenue's dropping.”
Kohrs noted that Robinhood’s cognition by the retail trading assemblage is cardinal to its usership and, consequently, however its banal performs. And close now, helium said, retail traders presumption the level to beryllium “a small spot person to the Sheriff of Nottingham” — the unjust tyrant successful the communicative of Robin Hood — alternatively than the titular leader himself.
“There's decidedly been an exodus from Robinhood,” helium said. “One of the ones that I cognize is becoming precise fashionable is Public. It's different commission-free brokerage. But the quality is there's nary outgo for bid flow. As there's retail traders learning much and much astir what's going connected successful presumption of marketplace operation … they're blessed paying a commission, knowing that [they’re] paying for transparency, oregon they're going to ones that conscionable don't prosecute successful outgo for bid travel astatine all.”
Robinhood and cryptocurrency
Even successful presumption of its cryptocurrency speech offerings, Robinhood whitethorn beryllium falling down the competition. The institution reported successful its latest net study that its cryptocurrency transaction revenues decreased 39% twelvemonth implicit twelvemonth to $54 million, compared to $88 cardinal successful the archetypal 4th of 2021.
And though Robinhood Crypto added the quality to bargain and merchantability fashionable cryptocurrencies similar Shiba Inu (SHIB-USD), Solana (SOL-USD), Compound (COMP1-USD), and Polygon (MATIC-USD) successful mid-April, Kohrs believes it whitethorn beryllium excessively little, excessively late.
“So adjacent if they're attempting to rebrand and truly absorption connected crypto, it seems similar it's going a small spot excessively dilatory successful that their pain complaint close now, similar I said, [was] $3.7 cardinal past year,” helium said. “They already burned different $300-plus cardinal this archetypal quarter. And really, the sentiment of it, I conscionable don't spot galore people. In presumption of equities, options, and crypto, I deliberation there's antithetic brokerages and exchanges that are much trusted than Robinhood.”
Thomas Hum is simply a writer astatine Yahoo Finance. Follow him connected Twitter @thomashumTV